Apache Energy's 2008 Varanus Island explosion tore a $2.4 billion hole in the State's economy, by disrupting a third of WA's gas supplies for months.

But there has been a silver lining: the Department of Mines and Petroleum, which was last year forced by a technicality to drop legal action against the company for having corroded pipes, estimates it will save $745,000 from halting the action.

This will form half of the department's $1.5 million in required savings under the State Government's 2012-13 efficiency drive, updated in the Mid Year Review.

DMP deputy director general Tim Griffin said it would also cut back on advertising and IT spending, but that discontinuing the Varanus case was the main saving and it had been looming for some time.

"A specific weakness in the prosecution case was initially identified in August 2011, with the Minister for Mines and Petroleum announcing the withdrawal of the prosecution on 29 March 2012," he said.

The court case floundered because Apache's lawyers successfully argued that State documents had referred to Apache's installation as "pipeworks" instead of a "pipeline". But Apache is not off the hook completely, with Alcoa's insurers pursing it for $158 million in damages.

Alcoa claims Apache's failure to maintain a pipeline at the site caused the disaster and led to it incurring costs of $158 million from shutting its alumina refineries in Kwinana and Pinjarra, which used gas from Varanus. BHP is also considering a related action against Varanus gas reseller Alinta.